Split of Opinion Continues About Arbitrability of State Statutory Labor Claims
“Once more unto the breach, dear friends, once more.” (Henry V, Act 3, Scene 1).
Hoover v. American Income Life Insurance Company, Case No. E052864 (4th Dist. Div. 2 May 16, 2012) (Codrington, J., author) (certified for publication) underscores a split in the law, concerning the arbitrability of state statutory labor claims, that we reported on just last week.
On June 5, 2012, we posted on Iskanian v. CLS Transportation Los Angeles, LLC, Case No. B235138 (2nd Dist. Div. 2 June 4, 2012) (Boren, P.J., author) (certified for publication), a labor code violations case, in which the Court of Appeal interpreted AT&T Mobility v. Concepcion broadly to hold that the Federal Arbitration Act “conclusively invalidates the Gentry test” for finding that a statutory right is unwaivable and cannot be arbitrated. Also, the court in Iskanian disagreed with the majority’s opinion in Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011), that the Concepcion holding does not apply to representative claims under the Private Attorney General Act of 2004 – instead, the Federal Arbitration Act (FAA) can trump employee statutory rights, according to Iskanian.
Hoover is the latest California wage and hour case involving arbitrability of employee state statutory labor claims. But in Hoover, at footnote 2, the 4th District, Division 2, explicitly and positively relies upon Brown, infra: “AT&T does not provide that a public right . . . can be waived if such a waiver is contrary to state law.” Hoover, 197 Cal.App.4th 489, 500, 502-503.
In addition, the court in Hoover concluded that the employer had the burden to establish FAA coverage/preemption, and the employer had failed to establish that the relationship between the plaintiff employee and the defendant employer “had a specific effect or ‘bear[ing] on interstate commerce in a substantial way.” Therefore, because the Commerce Clause in the US Constitution did not reach the relationship, FAA preemption didn’t even kick in.
The court in Hoover also rejected the employer’s argument to compel arbitration on the more mundane ground of waiver. Here, the employer waited almost 15 months after Hoover’s complaint was filed to move to compel arbitration. Before moving to compel, the employer filed an answer to the complaint with 22 affirmative defenses, none of which alleged the existence of an arbitration provision, propounded interrogatories and document requests, noticed Hoover’s deposition, and tried unsuccessfully to remove to federal court.
Despite all the evidence of the employer’s waiver of arbitration, the court still wanted to make its firm statement about the arbitrability of state statutory labor claims: “Even if . . . defendant had not waived its right to assert arbitration, we would decide [defendant] could not compel arbitration in the present case.”
Last week, we ended our post on Iskanian by observing:
“This is an active area of the law. Kinecta, Brown, and Iskanian create a sharp split in authority. As fellow-blogger Kimberly Kralowec says about Iskanian in her post . . . in the UCL Practitioner, ‘We should all watch this case to see if the California Supreme Court takes it up.’”
Ditto for Hoover. No wonder the court closes its opinion in Hoover by observing this is a “fluid and volatile area of the law.”
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